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Monday's Medicaid Expansion Showdown


Lee Schalk
January 4, 2013

On Monday, Governor Rick Scott, who has been a sharp critic of Obamacare, will finally meet face-to-face with Health and Human Services Secretary Kathleen Sebelius. This one will be worth keeping a close eye on – not only did Scott ignore the December deadline to notify federal officials about Florida's health insurance exchange, but two weeks ago, Florida’s Agency for Health Care Administration released a report showing that Medicaid expansion in Florida would cost taxpayers in the Sunshine State a staggering $26 billion over the next decade. This estimate is more than three times the $8 billion estimate that was released a few months back and does not include the $38 billion in additional costs to the federal government for Florida’s possible expansion.

In its June 2012 decision on Obamacare, the Supreme Court gave states the ability to opt into or out of the law’s Medicaid expansion. For those unfamiliar with how the expansion would work, enrollment would be extended to all people under 65 who are not eligible for Medicare and have incomes up to 133 percent of the federal poverty level. In addition to income requirements, other current criteria for eligibility (for example, pregnancy or a child in the household) will be loosened in states that opt into the expansion. Prior to the Court’s decision, 16 million people were expected to be added to states’ Medicaid rolls.

In February, before the Supreme Court had ruled on the health law, the Government Accountability Office surveyed state budget directors on the law’s Medicaid expansion. The survey results included responses from 42 of 50 states with near-universal agreement that states would have to spend much more on administrative costs, the acquisition or modification of information technology, and the influx of patients who were previously eligible but had not yet enrolled. Combined with the flood of newly eligible Medicaid patients, the cost of the expansion in states that choose to accept it will be unsustainable, as illustrated in the recent Florida report.

Medicaid is already on the brink of collapse. Higher enrollment in recent years has led to low reimbursement rates and payment delays. While administrative costs are a giant hurdle for Medicaid expansion, the doctor shortage is also cause for concern. It is estimated that 36 percent of doctors have stopped accepting new Medicaid patients, and 26 percent of physicians do not see any Medicaid patients at all. Clearly, Medicaid is already failing to provide quality care for the neediest Americans, and expanding the program by millions of additional people is certain to accelerate the program’s failure.

Another factor contributing to Medicaid’s high cost is rampant fraud.  The Government Accountability Office has designated Medicaid as a “high risk” program and has estimated that the improper payment rate in 2008 was 10.5 percent, amounting to $32 billion in fraudulent payments. With the additional Medicaid beneficiaries likely to join the rolls in states that approve the program’s expansion, this number could very easily increase.

A disturbing recent example of Medicaid fraud was featured last month on the Today Show. The report exposed a Texas company called Small Smiles that was performing unnecessary and unsafe dental procedures on poor children in order to reel in Medicaid dollars. At one location, $900,000 out of $1 million in revenue came from Medicaid.

Under Obamacare, approximately 1 million additional uninsured Floridians will be eligible to join this fiscally unstable and costly program. With the recent projection of an additional $26 billion over 10 years to the State of Florida, Secretary Sebelius has a lot of explaining to do on Monday.


 

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